Buying liability insurance for your business
Last updated: January 1
Savvy business owners manage risks proactively. This includes having liability insurance in case a business-related accident or mistake harms a third party. Purchasing commercial liability coverage that fits your small business's needs may help protect your company from paying costly legal fees, court expenses and lawsuit settlements if you're sued.
Consider the following types of liability insurance that may be available to help protect your business:
Commercial general liability insurance
Commercial general liability (CGL) insurance is typically part of a business owners policy (BOP). If you or an employee accidentally hurt someone or damage their belongings while doing your work, this coverage helps protect against related lawsuits.
CGL insurance may help pay for the other party's medical expenses or property repair bills, as well as your business's court costs, legal fees and settlements or judgments.
Professional liability insurance
This coverage, sometimes called errors and omissions insurance, helps cover unintentional mistakes made by businesses that provide services. If your business is sued over professional errors, negligent acts or malpractice, professional liability insurance may help cover the costs. Some states require certain businesses to carry professional liability insurance, according to the National Federation of Independent Business.
Employment practices liability insurance
Employment practices liability insurance, or EPLI, helps cover legal expenses if an employee or contractor sues your business for things like wrongful termination, discrimination or sexual harassment.
Non-owned auto liability insurance
You may have a commercial auto insurance policy to help cover vehicles owned by your company.
But, if your employees use their personal vehicles for their jobs, you may want to consider non-owned auto liability coverage for your small business. If an employee causes a car accident while conducting business, this type of insurance helps pay for the other party's medical bills or property repairs.
Data breach liability insurance
This type of insurance helps your small business pay for certain expenses after a data breach. Covered expenses may include things like identity theft monitoring for affected individuals or your business's legal fees. Data breach liability insurance is sometimes called data compromise coverage.
Whether your small business is a medical office or a neighborhood barber shop, having the right liability coverage in place can help protect it against costly lawsuits. Each type of business liability insurance is subject to coverage limits, which is the maximum amount your insurer will pay for a covered claim. That's why it's important to talk with an insurance agent about choosing the right coverages and coverage limits to fit your small business's needs.